<PAGE>   1












                              INRANGE TECHNOLOGIES

                                    EXECUTIVE

                         EVA INCENTIVE COMPENSATION PLAN





















                                                                 SEPTEMBER, 2000

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I.   PURPOSE

The objectives of the Inrange Technologies EVA Executive Incentive Compensation
Plan are to link incentive awards for plan participants to the creation of
investor wealth and to promote a culture of performance and ownership.
Accordingly, the program rewards sustained improvements in investor value.


II.  ELIGIBILITY

Officers and key managers in both line and staff positions who have significant
impact on the achievement of the Company's strategic objectives are eligible to
participate in the Executive EVA Incentive Compensation Plan. Participation for
a given plan year is based on the recommendation of the supervising officer or
unit President and approval by the Chief Executive Officer and/or the
Compensation Committee of the Board of Directors.

Upon approval by the Chief Executive Officer and/or the Compensation Committee,
participation shall be offered to prospective participants in consideration for
the prospective participant's agreement to sign a non-competition and
confidentiality agreement. The terms of the non-competition and confidentiality
agreement shall be on terms acceptable to the Company.


III. DEFINITIONS AND EVA INCENTIVE PLAN PARAMETERS

A. Economic Value Added (EVA):

Improvement in EVA provides the best operating measure of increases in
shareholder wealth. EVA is an estimate of the company's economic profit after
subtracting the cost of all capital (debt and equity) employed in the business.
EVA is the difference between our organization's net operating profits after-tax
(NOPAT) and the charge for capital employed, as follows:

         EVA = NET OPERATING PROFIT AFTER TAXES (NOPAT) - CAPITAL CHARGE
where,
         CAPITAL CHARGE = COST OF CAPITAL X CAPITAL EMPLOYED IN THE BUSINESS

NOPAT is the profit after subtracting cost of sales, operating expenses, taxes
and other adjustments from revenues. Cost of Capital is the required, or
minimum, rate of return necessary to compensate all investors for the capital
they have invested in the business. Capital represents the investment made by
shareholders and lenders in the business (total assets minus current
liabilities).



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B. Expected Improvement (EI):

Expected Improvement (EI) represents the annual EVA improvement, or growth,
required to provide our investors with a competitive, or cost of capital, return
on the market value of their investment. The plan pays a Target Bonus for
achieving Expected Improvement, i.e., employees receive their target cash
compensation when investors receive their target investment return. The Expected
EVA Improvement amounts for Inrange Technologies for 2000 are shown in Appendix
A.

C. Target Bonus:

Target Bonus is the bonus earned for achieving EI. A participant's Target Bonus
is calculated by multiplying his or her year end salary (as of December 31) by
his or her Bonus Class Percent. For example, if year end salary is $75,000 and
Bonus Class Percent is 10%, the Target Bonus is $7,500:

              Year End Salary x Bonus Class Percent = Target Bonus

                              75,000 x 10% = $7,500

D. EVA Interval:

The EVA Interval is the amount of EVA improvement, in excess of EI, needed to
earn each additional multiple of the target bonus. For example, EVA improvement
of one Interval in excess of EI earns a bonus multiple of 2.0, or 1.0 more than
target, while EVA improvement of two Intervals in excess of EI earns a bonus
multiple of 3.0, or 2.0 more than target. The EVA Interval is also the shortfall
in EVA improvement, below EI, that results in a zero bonus. The EVA Interval
amounts for all INRANGE business units appear in Appendix A.

E. Bonus Multiple:

The Bonus Multiple is determined by (1) the difference between actual and
expected EVA improvement and (2) the EVA Interval:

              BONUS MULTIPLE = (1+[((DELTA)EVA - EI)/EVA INTERVAL])

When the EVA improvement equals EI, the Bonus Multiple is 1.0. When the EVA
improvement exceeds EI, the Bonus Multiple is greater than 1.0 and when the EVA
improvement falls short of EI, the Bonus multiple is less than 1.0.



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F. Declared Bonus:

The Declared Bonus, which is determined at the end of the Bonus Plan year, is
the amount of bonus earned by a participant as a result of EVA performance
during the year. There is no limit to how large or small bonuses can be. The
Declared Bonus can even be a negative amount as a result of a negative change in
Economic Value. The annual Declared Bonus a participant achieves may be stated
as:

                 DECLARED BONUS = TARGET BONUS * BONUS MULTIPLE
       DECLARED BONUS = TARGET BONUS* (1+ [(DELTA)EVA - EI)/EVA INTERVAL])

An easy and practical way for a plan participant to determine his or her
Declared Bonus is to multiply Target Bonus times the Bonus Multiple.

The Declared Bonus can also be expressed as:

 DECLARED BONUS = TARGET BONUS + A SHARE OF ((DELTA)EVA - EXPECTED IMPROVEMENT)
         DECLARED BONUS = TARGET BONUS + [(TARGET BONUS/EVA INTERVAL) *
                               ((DELTA)EVA - EI)]

The ratio [Target Bonus/EVA Interval] is your share of EVA improvement in excess
of EI.

G. Bonus Bank:

The Bonus Bank is an essential component in protecting and building investor
value. All Declared Bonus amounts flow through the Bonus Bank, to promote a long
term horizon and ensure that only sustainable improvements are rewarded. Thus,
the Bonus Bank maintains a cumulative relationship between bonuses paid and EVA
improvement over time.

Each participant has his or her own individual Bonus Bank account. If, after the
Declared Bonus is determined, the prior year balance plus the Declared Bonus is
less than Target Bonus, the entire balance is paid.

When the balance exceeds Target Bonus, the bonus available for payment is equal
to Target Bonus plus one-third of any remaining balance. The other two-thirds is
deferred and ultimately paid out only if the performance is sustained. If EVA
falls by enough, a negative amount is banked. When a negative balance exists, it
must be paid off through future EVA improvements before any bonus is paid,
maintaining the sharing relationship between cumulative EVA achievement and
cumulative bonuses. The Bonus Award flow through the Bonus Bank is depicted
below.


<TABLE>
<S>                              <C>                           <C>
      ----------------            ------------                  -----------------
     |                |          |            |                |                 |
     | Declared Bonus |--------->| Bonus Bank |--------------->| Available Bonus |
     |                |          |            |                |                 |
      ----------------            ------------                  -----------------

        Target Bonus            Beginning Balance          Up to Target Bonus plus one
        + a % of EVA                    +                  third of remaining balance
     above or below EI            Declared Bonus       (Depending on Personal Performance)
</TABLE>


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IV.  PERSONAL PERFORMANCE

A. Determining Personal Performance Award Amounts

The EVA Incentive Plan award for Personal Performance can be earned only after
improving EVA. Thus the Personal Performance Award is based on a "carve out"
portion of the Available Bonus. The Personal Performance carve-out for plan
participants is 20% of the total annual bonus available to be paid. Thus, of the
award payment amount available in any year, 80% is paid BASED ON BUSINESS
PERFORMANCE and 20% is paid based on Personal Performance, depicted for a
Division President as follows:

<TABLE>
<S>                               <C>             <C>           <C>              <C>                 <C>
 --------------
|   Declared   |------------
|     Bonus    |        20% |     ----------       -------       -----------      --------------      --------
| Consolidated |            |    | Declared |     | Bonus |     | Available |    | 80% Business |    | Bonus  |
 --------------             |--->|  Bonus   |---->| Bank  |---->|   Bonus   |--->| 20% Personal |--->| Award  |
                            |    |          |     |       |     |           |    |              |    | Earned |
 --------------             |     ----------       -------       -----------      --------------      --------
|   Declared   |            |
|     Bonus    |        80% |
|   Division   |------------
 --------------
</TABLE>


Any funds remaining from Personal Performance Awards that are not distributed
are forfeited.




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B. Measuring Personal Performance

At year end, the immediate supervisor shall evaluate each participant's
performance TO DETERMINE WHAT HIS OR HER DISCRETIONARY BONUS PERCENTAGE SHALL
BE. The evaluation shall be based on the participant's leadership skills
focusing on the INRANGE Leadership Principles, the performance of the individual
in carrying out his/her primary functional assignment, and the overall impact,
contribution and achievement of the participant.

          Personal Performance                           Amount of Available 20%
           Achievement Rating                                    Earned
          --------------------                           -----------------------

        -  Requires significant improvement.                    up to 5%
        -  Inconsistent; occasional good performance,
            sometimes falls short.                              up to 10%
        -  Good commitment and good, consistent
            results.  On par performance.                       up to 15%
        -  High achiever; recognized by others as
            having high impact and strong leadership
            skills.                                             up to 20%

C. Bonus Award and Bank Example

The chart below depicts an example participant's EVA Bonus Award and Bank
through 3 years. For simplification, Target Bonus is set at $10,000 in all three
years.

  -----------------------------------------------------------------------------
                                Inrange Technologies

                            Bonus Award and Bank Example


                                                  1999      2000     2001
                                                 ------   -------  -------

        A. Target Bonus                          10,000    10,000   10,000

        B. Bonus Multiple                          2.50      1.80     1.30
                                                 ------   -------  -------
        C. Declared Bonus               A x B    25,000    18,000   13,000

        D. Beg. Bank Balance                          0    10,000   12,000
                                                 ------   -------  -------
        E. Beg Bank Balance +           C + D    25,000    28,000   25,000
           Declared Bonus

        F. Pay Target Bonus (or             A    10,000    10,000   10,000
           available if less)

        G. 1/3 of Bank Balance      (E - F)/3     5,000     6,000    5,000
                                                 ------   -------  -------
        H. Available Bonus for          F + G    15,000    16,000   15,000
           performance

        I. Company Performance Award      80%    12,000    12,800   12,000

        J. Personal Performance Award     15%     2,250     2,400    2,250
                                                 ------   -------  -------
        K. Award                        I + J    14,250    15,200   14,250

        L. Ending Bank Balance          E - H    10,000    12,000   10,000
  -----------------------------------------------------------------------------



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V.   ADMINISTRATIVE MATTERS

The following guidelines have been established to define how the issues
addressed below shall be dealt with under the plan. It is the responsibility of
the CEO and the Compensation Committee of the Board of Directors to:

     1.   Interpret the guidelines in their application.
     2.   Establish additional guidelines not specifically addressed below.
     3.   Change, amend, or alter any of the guidelines as necessary to achieve
          the objectives of the plan.

Any decision rendered by the CEO and/or the Compensation Committee regarding any
aspect of the plan is final. Except where specifically authorized by the
Compensation Committee or the CEO, no one is authorized to act in any manner
that is contrary to the plan itself or to these guidelines.

1.   TRANSFERS: A Participant who transfers from one business unit to another
     shall have his or her Bonus Bank transferred to the new unit. If a
     participant works part of the year in Division A and part of the year in
     Division B, the participant's Declared Bonus shall be the sum of a
     pro-rated bonus based on Division A performance and a pro-rated bonus based
     on Division B performance:

                                Declared Bonus =

             Target Bonus * Div A Bonus Multiple * (Div A Months/12)
                                        +
            Target Bonus * Div B Bonus Multiple * (Div B Months/12)]

     The pro-rated bonuses shall be based on the Divisions' full year Bonus
     Multiples, participant's Target Bonus for the year, and the time spent in
     each Division.

2.   DEATH: If a participant dies during the year, the participant's Declared
     Bonus shall be a pro-rated bonus based on the number of months worked
     during the year:

            Target Bonus * Unit Bonus Multiple * (Months Worked/12)]

     The Bonus Award Earned shall be calculated based on the Declared Bonus, the
     Beginning Bonus Bank balance and the participant's Personal Performance
     Achievement Rating as provided in Section V. The Bonus Award Earned and the
     Ending Bonus Bank Balance, if positive, shall be paid to the participant's
     designated company life insurance beneficiaries at the normal bonus payment
     date after the end of the fiscal year.



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3.   RETIREMENT AND DISABILITY: When a participant retires (the participant must
     be eligible to retire under the applicable pension plan and must have at
     least 3 years of service with Inrange since the IPO date of September 22,
     2000) or when a participant becomes temporarily or permanently disabled (as
     determined by the Company), participant's Declared Bonus shall be a
     pro-rated bonus based on the number of months worked during the year:

             Target Bonus * Unit Bonus Multiple * (Months Worked/12)

     Nothing herein shall be interpreted, however, as amending or otherwise
     changing the vesting requirement in any other company pension or benefit
     plans.

     The Bonus Award Earned shall be calculated based on the Declared Bonus, the
     Beginning Bonus Bank Balance and the participant's Personal Performance
     Achievement Rating as provided in Section V. The Bonus Award Earned, if
     positive, shall be paid to the participant at the normal bonus payment date
     after the end of the fiscal year. When a participant's temporary disability
     carries over into a subsequent fiscal year, the participant's Declared
     Bonus for that year shall also be calculated using the formula above.

     If a participant terminates before eligibility for retirement benefits
     under the applicable pension plan, or retires with eligibility for
     retirement benefits but before achieving at least 3 years of service with
     Inrange since the IPO date of September 22, 2000, such termination shall
     result in forfeiture of both the Bonus Bank and the bonus payment for the
     year in which the termination occurs.

     For participants who retire or become permanently disabled, the Ending
     Bonus Bank Balance, if positive, shall be paid to the participant, up to a
     maximum of 6 times the participant's final annual Target Bonus, at the
     normal bonus payment date after the end of the fiscal year. For
     participants who are temporarily disabled, the Ending Bonus Bank Balance
     remains fully at risk and is not paid out.

     For participants who retire or become permanently disabled, the Ending
     Bonus Bank Balance in excess of 6 times the participant's annual Target
     Bonus (the "Excess Bonus Bank Balance") shall be at risk and adjusted at
     the end of the first and second post-retirement (or post-permanent
     disability) fiscal years by the addition of a Declared Bonus. The Declared
     Bonus for the first and second post-retirement (or post-disability) fiscal
     years shall be equal to:

                    Target Bonus * [Unit Bonus Multiple - 1]

     50% of the Excess Bonus Bank Balance, if positive, shall be paid to the
     participant at the normal bonus payment time after the end of first
     post-retirement (or post-permanent disability) fiscal year, and the
     remainder of the Excess Bonus Bank Balance shall be paid at the normal
     bonus payment time after the end of the second post-retirement (or
     post-disability) fiscal year.



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     The example below is based on the following data:

         ---------------------------------------------------------------
          Target Bonus                                          $20,000
          Beginning Bonus Bank                                 $400,000
          Retirement Date                                       July 31
          Unit Bonus Multiple - Retirement Year                    1.45
          Unit Bonus Multiple - 1st Post Retirement Year           2.00
          Unit Bonus Multiple - 2nd Post Retirement Year             .7
         ---------------------------------------------------------------

     The participant's Declared Bonus for his/her retirement year is:

            Target Bonus * Unit Bonus Multiple * (Months Worked/12)]

                        $20,000 * 1.45 * (7/12) = $16,917

     The Declared Bonus increases the Bonus Bank Balance to $416,917, and makes
     the Available Bonus $152,306. After deducting the Available Bonus, the
     Ending Bank Balance is $264,611 = $416,917 - $152,306. The Ending Bonus
     Bank Balance is 13.2 times the participant's target bonus and exceeds 6x
     target bonus by $144,611. At the normal bonus payment date after the end of
     the fiscal year, the participant receives his/her Bonus Award Earned
     ($152,306, assuming the highest Personal Performance Achievement Rating)
     and the Ending Bonus Bank Balance, up to a maximum of six times target
     bonus, or $120,000. The total payment is $272,306, and leaves an Excess
     Bonus Bank Balance of $144,611.

     The Declared Bonus for the first post-retirement year is:

                    Target Bonus * [Unit Bonus Multiple - 1]

                         $20,000 * [2.00 - 1] = $20,000

     This Declared Bonus is added to the Excess Bonus Bank Balance, giving a new
     Bank Balance of $164,611 (= $144,611 + $20,000). 50% of this Bank Balance,
     or $82,306, is paid out at the normal bonus payment date following the end
     of the first post-retirement year, leaving an Excess Bonus Bank Balance of
     $82,306.

     The Declared Bonus for the second post-retirement year is:

                    Target Bonus * [Unit Bonus Multiple - 1]

                          $20,000 * [0.7 - 1] = -$6,000

     This Declared Bonus is added to the Excess Bonus Bank Balance, giving a new
     Bank Balance of $76,306 (= $82,306 - $6,000). This Bank Balance is paid out
     in full at the normal bonus payment date following the end of the first
     post-retirement year.


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4.   ORGANIZATION RESTRUCTURING: When a participant's position is eliminated and
     the participant is terminated as a part of a business reorganization or
     organizational restructuring (as determined by the CEO or the Compensation
     Committee), participant's Declared Bonus shall be a pro-rated bonus based
     on the number of months worked during the year:

             Target Bonus * Unit Bonus Multiple * (Months Worked/12)

     The Bonus Award Earned shall be calculated based on the Declared Bonus, the
     Beginning Bonus Bank balance and the participant's Personal Performance
     Achievement Rating as provided in Section V. The Bonus Award Earned and the
     Ending Bonus Bank Balance, if positive, shall be paid to the participant at
     the normal bonus payment date after the end of the fiscal year.

5.   CHANGE FROM UNCAPPED TO CAPPED PLAN: When a participant is moved from the
     uncapped EVA Executive Incentive Compensation Plan to a capped EVA bonus
     plan, he/she shall retain his/her bonus bank and receive a Bonus Award
     Earned each year from the uncapped plan until his/her bonus bank is
     exhausted, provided he/she remains employed by the Company. For the year in
     which the participant is moved, participant's Declared Bonus shall be a
     pro-rated bonus based on the number of months in the uncapped plan:

         Target Bonus * Unit Bonus Multiple * (Uncapped Plan Months/12)

     The Bonus Award Earned shall be calculated based on the Declared Bonus, the
     Beginning Bonus Bank balance, the participant's last annual Target Bonus in
     the uncapped plan and the participant's Personal Performance Achievement
     Rating as provided in Section V. In subsequent years, the Bonus Award
     Earned shall be calculated based on a Declared Bonus of $0, the Beginning
     Bonus Bank Balance, the participant's last Target Bonus in the uncapped
     plan and the participant's Personal Performance Achievement Rating as
     provided in Section V.

     The following example is for a participant who has a $60,000 bonus bank
     when he/she leaves the uncapped plan and whose last Target Bonus was
     $15,000. Year 1 is the participant's first full year in the capped plan.

         ================================================================
                                           Year 1     Year 2     Year 3
         ----------------------------------------------------------------
         Beginning Bonus Bank              $60,000    $30,000    $10,000
         Declared Bonus                         $0         $0         $0
         Target Bonus                      $15,000    $15,000    $15,000
         Available Bonus                   $30,000    $20,000    $10,000
         Personal Performance Rating          Good       Good       Good
         Bonus Award Earned                $28,500    $19,000     $9,500
         Ending Bonus Bank                 $30,000    $10,000         $0
         ================================================================


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     The Available Bonus in each year is equal to the Beginning Bonus Bank, up
     to the amount of the participant's last Target Bonus in the uncapped plan,
     plus 1/3 of the Bonus Bank Balance in excess of the Target Bonus. In Year 1
     (i.e., the first year in the capped plan), the Available Bonus is $15,000 +
     1/3 * ($60,000 - $15,000) = $15,000 + $15,000 = $30,000. The Bonus Award
     Earned is 95% of the Available Bonus each year based on a Personal
     Performance Achievement Rating of "good".

6.   RESIGNATIONS AND TERMINATION: Voluntary termination of employment with
     INRANGE and termination for any reason other than 1) loss of position due
     to business reorganization or organizational restructuring, 2) death or 3)
     a qualified retirement under INRANGE benefit plans shall result in
     forfeiture of both the Bonus Bank and the bonus payment for the year in
     which the termination or resignation occurred. Participants who are
     employed on the last day of the fiscal year, but terminate voluntarily (or
     for any reason other than those just enumerated) prior to the normal bonus
     payment date, shall receive any Bonus Award Earned for the fiscal year, but
     shall forfeit their Ending Bonus Bank.

7.   Sale of an INRANGE Business Unit: When one of the business units of the
     Corporation is sold, participant's Declared Bonus shall be a partial year
     bonus unless the sale agreement includes an "earn-out" provision. The
     partial year Declared Bonus (in the absence of an "earn-out" provision)
     shall be based on a pro-rated Target Bonus, the EVA improvement for the
     partial year ending on the closing date of the sale, and a pro-rated
     Expected Improvement:

                     Target Bonus * (Days thru Closing/365)
                                        +
                         [Target Bonus/EVA Interval] *
          [(DELTA)EVA              - (EI * (Days thru Closing/365))]
                     Thru Closing

     The EVA improvement for the partial year ending on the closing date of the
     sale shall be equal to the EVA for the partial year ending on the closing
     date minus prior year EVA for the partial year ending at the month end
     closest to the closing date. The Bonus Award Earned shall be calculated
     based on the Declared Bonus, the Beginning Bonus Bank balance and the
     participant's Personal Performance Achievement Rating as provided in
     Section V. The Bonus Award Earned and the Ending Bonus Bank Balance, if
     positive, shall be paid to the participant at the normal bonus payment date
     after the end of the fiscal year. If the participant is not actively
     employed with INRANGE through the closing date of the sale, the participant
     shall not be entitled to any Bonus Award or Bonus Bank payment.

     If the sale agreement includes an "earn-out" provision, the Company shall
     have no obligation to pay bonuses based on partial year performance and
     shall have the right to negotiate with the buyer the payment of bonuses
     based on full year performance. If the sale agreement includes an
     "earn-out" provision and bonuses are paid based on full year performance, a
     participant shall not be entitled to any Bonus Award or Bonus Bank



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     payment unless the participant is actively employed by the buyer at the end
     of the fiscal year.

8.   NON-COMPETITION AND NON-DISCLOSURE: For purposes of this Bonus Plan, if a
     plan participant leaves the company with rights to future payments from the
     plan, then until those payments are distributed to the participant, he or
     she shall not directly or indirectly own, manage, operate, join, control,
     become employed by or participate in the management, operation or control
     of, any business which is a competitor, customer, or supplier of Inrange
     Technologies, or any subsidiary or division thereof without the specific
     consent of the Corporation; except as a shareholder of a publicly-held
     competitor, customer or supplier corporation where such ownership does not
     exceed one percent (1%) of the total shares outstanding.

     Additionally, the participant shall not disclose any confidential
     information pertaining to the business of the Corporation, including the
     location and identity of its customers and suppliers, its costs of
     operation, the pricing of its products and services, its operating
     practices and its product details without the express written approval of
     the Corporation.

     The failure of a participant or former participant to comply with the
     provisions of this Section VI. 6 shall result in forfeiture of any payments
     that might otherwise be due because of his or her prior participation in
     the plan.

9.   CHANGE-OF-CONTROL: In the event of a change-of-control of Inrange
     Technologies (defined in Appendix B) the full Bonus Bank shall be paid as
     of the date the change-of-control occurs. Additionally, the
     change-of-control date shall be treated as if it were the end of that bonus
     plan year, EVA performance shall be measured, and the participant shall be
     paid the higher of that full year's target bonus or the actual earned
     bonus.

10.  NEGATIVE BALANCES: At year-end when the Business Unit's annual EVA
     Improvement is calculated, each participant's Declared Bonus is then
     determined. The Declared Bonus, whether a positive or negative amount,
     flows through each participant's Bonus Bank. A negative Declared Bonus has
     the effect of reducing the amount of the Beginning Bank Balance. If the
     Year-ending Bank Balance (the Beginning Bank Balance adjusted by that
     year's Declared Bonus) is positive, up to Target Bonus plus one third of
     the balance above Target Bonus is available to be paid out. Residual
     amounts, including negative Bank Balances, are carried forward to be
     credited or debited against future Declared Bonus amounts. Negative Bank
     Balances shall not be held as claims against participants who leave the
     payroll for any reason.

11.  ADMINISTRATION: The Plan shall be administered by the Compensation
     Committee of the Board of Directors.

12.  PLAN CONTINUATION: The Board may at any time amend, suspend, discontinue or
     terminate the Plan, provided, however, that no amendment shall, without the
     consent of a participant, alter or impair any award which has been
     previously declared or granted to a participant.


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13.  NO RIGHT OF ASSIGNMENT: Except as expressly provided herein, no right or
     benefit under the Plan shall be subject to anticipation, alienation, sale,
     assignment, pledge, encumbrance or charge. No right or benefit hereunder
     shall in any manner be liable for or subject to the debts, contracts,
     liabilities or torts of the person entitled to such right or benefit.

14.  NO GUARANTEE: Nothing in the Plan shall be construed to give any employee
     of the Company any right to be granted any award other than at the
     Compensation Committee's sole discretion, to limit the right of the Company
     to terminate the employment of any participant at any time, or to be
     evident of any agreement or understanding, express or implied, of a
     participant's right to continued employment.










                                                                         Page 12
<PAGE>   14
                                   APPENDIX B

                    CHANGE OF CONTROL OF INRANGE TECHNOLOGIES


A "Change of Control" shall be deemed to have occurred if:


     (a)  Any "Person" (as defined below), excluding for this purpose Inrange
          Technologies (the Company) or any subsidiary of the Company, any
          employee benefit plan of the Company or of any subsidiary of the
          Company, or any entity organized, appointed or established for or
          pursuant to the terms of any such plan which acquires beneficial
          ownership of common shares of the Company, is or becomes the
          "Beneficial Owner" (as defined below) of twenty percent (50%) or more
          of the common shares of the Company then outstanding; provided,
          however, that no Change of Control shall be deemed to have occurred as
          the result of an acquisition of common shares of the Company by the
          Company which, by reducing the number of shares outstanding, increases
          the proportionate beneficial ownership interest of any Person to
          twenty percent (50%) or more of the common shares of the Company then
          outstanding, but any subsequent increase in the beneficial ownership
          interest of such a Person in common shares of the Company shall be
          deemed a Change of Control; and provided further that if the Board of
          Directors of the Company determines in good faith that a Person who
          has become the Beneficial Owner of common shares of the Company
          representing twenty percent (50%) or more of the common shares of the
          Company then outstanding has inadvertently reached that level of
          ownership interest, and if such Person divests as promptly as
          practicable a sufficient number of shares of the Company so that the
          Person no longer has a beneficial ownership interest in twenty percent
          (50%) or more of the common shares of the Company then outstanding,
          then no Change of Control shall be deemed to have occurred. For
          purposes of this paragraph (a), the following terms shall have the
          meanings set forth below:

          (i)  "Person" shall mean any individual, firm, limited liability
               company, corporation or other entity, and shall include any
               successor (by merger or otherwise) of any such entity.

          (ii) "Affiliate" and "Associate" shall have the respective meanings
               ascribed to such terms in Rule 12b-2 of the General Rules and
               Regulations under the Securities Exchange Act of 1934, as amended
               (the "Exchange Act").



<PAGE>   15



         (iii) A Person shall be deemed the "Beneficial Owner" of and shall be
               deemed to "beneficially own" any securities:

               (A)  which such Person or any of such Person's Affiliates or
                    Associates beneficially owns, directly or indirectly
                    (determined as provided in Rule 13d-3 under the Exchange
                    Act);

               (B)  which such Person or any of such Person's Affiliates or
                    Associates has (1) the right to acquire (whether such right
                    is exercisable immediately or only after the passage of
                    time) pursuant to any agreement, arrangement or
                    understanding (other than customary agreements with and
                    between underwriters and selling group members with respect
                    to a bona fide public offering of securities), or upon the
                    exercise of conversion rights, exchange rights, rights
                    (other than rights under the Company's Rights Agreement
                    dated June 25, 1996 with The Bank of New York, as amended),
                    warrants or options, or otherwise; provided, however, that a
                    Person shall not be deemed the Beneficial Owner of, or to
                    beneficially own, securities tendered pursuant to a tender
                    or exchange offer made by or on behalf of such Person or any
                    of such Person's Affiliates or Associates until such
                    tendered securities are accepted for purchase or exchange;
                    or (2) the right to vote pursuant to any agreement,
                    arrangement or understanding; provided, however, that a
                    Person shall not be deemed the Beneficial Owner of, or to
                    beneficially own, any security if the agreement, arrangement
                    or understanding to vote such security (a) arises solely
                    from a revocable proxy or consent given to such Person in
                    response to a public proxy or consent solicitation made
                    pursuant to, and in accordance with, the applicable rules
                    and regulations promulgated under the Exchange Act and (b)
                    is not also then reportable on Schedule 13D under the
                    Exchange Act (or any comparable or successor report); or

               (C)  which are beneficially owned, directly or indirectly, by any
                    other Person with which such Person or any of such Person's
                    Affiliates or Associates has any agreement, arrangement or
                    understanding (other than customary agreements with and
                    between underwriters and selling group members with respect
                    to a bona fide public offering of securities) for the
                    purpose of acquiring, holding, voting (except to the extent
                    contemplated by the proviso to subparagraph (a)(iii)(B)(2),
                    above) or disposing of any securities of the Company.


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                    Notwithstanding anything in this definition of Beneficial
                    Ownership to the contrary, the phrase "then outstanding,"
                    when used with reference to a Person's beneficial ownership
                    of securities of the Company, shall mean the number of such
                    securities then issued and outstanding together with the
                    number of such securities not then actually issued and
                    outstanding which such Person would be deemed to own
                    beneficially hereunder.

          (b)  During any period of two (2) consecutive years, individuals who
               at the beginning of such two-year period constitute the Board of
               Directors of the Company and any new director or directors
               (except for any director designated by a person who has entered
               into an agreement with the Company to effect a transaction
               described in paragraph (a), above, or paragraph (c), below) whose
               election by the Board or nomination for election by the Company's
               shareholders was approved by a vote of at least two-thirds of the
               directors then still in office who either were directors at the
               beginning of the period or whose election or nomination for
               election was previously so approved, cease for any reason to
               constitute at least a majority of the Board; or

          (c)  Approval by the shareholders of (or if such approval is not
               required, the consummation of) (i) a plan of complete liquidation
               of the Company, (ii) an agreement for the sale or disposition of
               the Company or all or substantially all of the Company's assets,
               (iii) a plan of merger or consolidation of the Company with any
               other corporation, or (iv) a similar transaction or series of
               transactions involving the Company (any transaction described in
               parts (i) through (iv) of this paragraph (c) being referred to as
               a "Business Combination"), in each case unless after such a
               Business Combination the shareholders of the Company immediately
               prior to the Business Combination continue to own at least eighty
               percent (80%) of the voting securities of the new (or continued)
               entity immediately after such Business Combination, in
               substantially the same proportion as their ownership of the
               Company immediately prior to such Business Combination.

A "Change of Control" shall not include any transaction described in paragraph
(a) or (c), above, where, in connection with such transaction, a participant
and/or any party acting in concert with that participant shall substantially
increase their, his or its, as the case may be, ownership interest in the
Company or a successor to the Company (other than through conversion of prior
ownership interests in the Company and/or through equity awards received
entirely as compensation for past or future personal services).